A critical examination of a $4.4 trillion compulsory savings experiment
Australia has a superannuation system which is often held up as a global model. In one key way it certainly is — it is a compulsory savings scheme that has amassed $4.4 trillion in assets at market value as of March 2026, making it the fourth-largest pension pool in the world. With a global population of 8.3 billion, a body of funds from a country of only 28 million people of that size, equal to roughly 150% of Australia’s GDP, has implications for all Australians, as well as being the envy of fund managers globally.
It is often held up as source of solidity and surety which has already ushered a generation of Australians into a more affluent retirement than their parents and grandparents would have dreamt of and sells itself on that basis. But the size of the super pool relative to GDP ensures that Australia is closer to a centrally managed economy in some key respects.
In particular, the size of the funds under management has implications for Australian politicians and policymakers, as well as the nominated beneficiaries. It has enormous implications for a corporate Australia, which outside commodities, is inwardly focussed, servicing some of the worlds most expensive labour, with additionally expensive housing, energy, retail, telecommunications and internet, and medical services, as well as financial services and insurance, in an economy which has a larger private debt than any comparable economy.
The operation of the system links past Australia to current Australians, and current Australia to future Australians. Those entering the period of life where the superannuation is accessed are effectively supported by Australians entering the workforce, for whom past superannuation experiences are a model and future expectation.
And the questions about the superannuation system only get bigger from there.
The system was designed in the early 1990s for an economy and a workforce that no longer exists. The size of the superannuation pool and its effect on the national interest was never taken into account at it inception and since. It needs fundamental reform, not incremental tinkering.
A reform agenda could address:
– Tax concessions: Cap concessions so they don’t disproportionately benefit high earners; redirect savings to the base of the income distribution
– Gender equity: Pay super on parental leave, introduce carer credits, and address the structural biases that leave women with a fraction of men’s retirement savings
– Fund concentration: Strengthen governance, transparency, and accountability for mega-funds that control trillions in national wealth
– National interest: Require a portion of super fund investments to be directed toward productive, innovation-enhancing ventures rather than purely asset-appreciating ones
– Money velocity: Consider whether locking away 12% of earnings for decades is the most efficient use of capital in an economy that needs dynamism and circulation
Or
We restart with a completely different system that solves for all of the above faults
The superannuation system is too big, too important, and too expensive to fail. But in its current form, it is failing too many Australians.
